Bullet train: PM Modi’s “gift to the nation” is an atrocious business idea

On November 2, the Indo-Asian News Service (IANS) released a news report that put a question mark on the viability of the bullet train project. The report said: “As the Narendra Modi government proceeds with the Mumbai-Ahmedabad bullet train project, an RTI query has revealed that over 40 per cent of seats on all the trains on this sector go vacant, causing huge losses to Western Railway.”

The report went on to say: “According to a Right to Information reply received by Mumbai activist Anil Galgali, just in the past one quarter, the Western Railway’s losses on this sector stood at nearly Rs 30 crore, or around Rs 10 crore per month,.”

The RTI query on seat occupancy on all the trains between Ahmedabad and Mumbai had been made by a Mumbai activist, Anil Galgali. In his reply, the Western Railway Chief Commercial Manager had said that in the July-September period this year, 40 per cent seats went vacant on the Mumbai-Ahmedabad sector and 44 per cent on the Ahmedabad-Mumbai route.

Quoting the surprisingly detailed reply by the Railways, the report said: “ … between July 1 and September 30, thirty-two mail/express trains were serving this sector (Mumbai-Ahmedabad), with a total seating capacity of 7,35,630 seats. Of these, only 4,41,795 seats were booked during that period, generating a revenue of Rs 30,16,24,623 against the total estimated income of Rs 44,29,08,220.”

With regard to the Ahmedabad-Mumbai route during the same period, the report , quoting the Railway official, said: “… (of) a total of 31 mail/express trains with a seating capacity of 7,06,446, only 3,98,002 were booked, resulting in a revenue of Rs 26,74,56,982 against the estimated expected income of Rs 42,53,11,471, spelling a massive loss of Rs 15,78,54,489..”

It is not surprising that the report sent a chill down the spine of Railways Ministry which has been promoting the Rs one lakh crore bullet train project as the Prime Minister’s gift to the nation. How can it be financially viable when existing trains are incurring such high losses?

The Government of India quickly went into the damage control mode. In a press release, the Chief Public Relations Officer of the Western Railway tried to give a spin to the chief commercial manager’s RTI reply. He said: “There are nine direct trains and 25 other trains going via Ahmedabad and the total earning on this sector during the period was Rs 233 crore, against the losses of nearly Rs 30 crore as per the RTI replies, which pertained to the number of passengers travelling between Mumbai Central and Ahmedabad.”

According to the PRO, “... of the nine direct trains, there were 803,150 berths, while the actual bookings were 830,978, coming to 103 per cent occupancy on the Mumbai-Ahmedabad sector, and in return direction, the position remained the same.”

The PRO went on to put on record: “In the 25 trains going via Ahmedabad, the berth availability was 1,070,710 and actual bookings were 1,230,585 or 115 per cent; in the return direction, it was even higher at 121 per cent.”

RTI activist Anil Galgali put this question to the Ministry of Railways: The chief public relations manager is saying that the total number of seats on this sector on 34 trains is much higher than the number of seats provided by the chief commercial manager in the RTI reply. Why is this discrepancy? Is one of them fudging facts? If yes, which one?

The RTI reply is supposed to be the information given under an Act passed by Parliament. Perjury is a punishable offence. So, the RTI reply should be considered authentic and the PRO’s attempt at putting a gloss over it should be seen as a desperate move to salvage the bullet train project from prying eyes.

But does it square with the given reality? Going by the estimate provided by the Japan International Cooperation Agency, which is an interested party in this case, 40,000 passengers would use the bullet train daily by 2023. It says that the revenue charged per every user should be around Rs 3,000. The fact is that the current AC chair car between Ahmedabad and Mumbai costs less than Rs 700 and a sleeper class reserved seat less than Rs 300. How many would be ready to fork out more than four\ten times to reach faster?

Even by this projection, the earning per year will be Rs 4,000 crore. Will that be enough to service the almost Rs 1,00,000 crore loan (even if it is a low-interest loan) and, more important, the operational cost of servicing the Japanese professionals deployed here, which is necessary to maintain the Japanese safety standards?

A report by Indian Institute of Management, Ahmedabad (IIM-A) tells us that there would not be many takers for the High Speed Railway (HSR) project (bullet train) if the ticket is priced at Rs 3,000. The most reasonable cost for it should be around Rs 1,500. The IIM-A report calculates that the operational cost could vary between 20 to 40 per cent of the revenue, depending on the management. “So, if the Railways earn a Rs 100 revenue, Rs 20 or Rs 40 will go for maintenance. Now, to cover the loan with operating cost in two scenarios… we will need 88,000—118,000 passengers respectively for both the scenarios.”

The author of the report says: “Typically, one train carries 800 passengers; so to carry 88,000 passengers daily, you will need to take a total of 100 trips, or 50 trips each way. So, we need three trains every hour in each direction.” The number of trains per hour would have to rise further if 118,000 passengers were to be carried every day.

Isn’t that a task of tall order given the current reality? Unfortunately, our government looks at the bullet train as a prestige project overlooking the financial viability of it in a developing country like ours.